Gold ETF inflows reversed after October 21, as gold dipped under $4,000

The inflows of funds into BTC and gold diverged, just as gold prices entered correction territory. BTC held above $113,000 on cautious trading, surpassing the performance of the precious metal. 

As expected, BTC shows signs of inflows shifting from gold. The precious metal entered correction territory after dipping under $4,000 per ounce. The inflows into BTC ETF started to recover, while gold inflows diminished in the past week. 

Gold reached peak ETF inflows as of October 21, with liquidity declining since then for the past week. As Cryptopolitan reported earlier, gold consolidated and prepared for its next directional move.

Spot gold retreated to $3,997.32, considered in correction territory. The precious metal took a step back as focus shifted to the value of the US dollar and the upcoming Fed interest rate decision. Gold also suffered after a shift to risk-on assets. 

BTC switches to risk-on asset

BTC this time showed it did not act as ‘digital gold’ and extended its gains, behaving more closely to tech stocks and risk-on assets. BTC has shown it can grow under many types of investment conditions, switching between a safe haven and hedge, or a risk-on asset. 

BTC retained its levels against gold in the past day, buying between 28 and 29 ounces of gold. After the most recent recovery, BTC traded at $113,590, with signs of recovering inflows both from crypto insiders and mainstream buyers through ETF. 

The recent shift in liquidity led to expectations of another BTC rally, as the asset is sometimes considered undervalued compared to gold. 

ETF inflows for BTC started picking up in the past few days, coinciding with gold’s slide. For now, BTC buying is more cautious, while at the same time ETF buyers are risking with Ethereum, expecting more growth from the network. 

BTC still leads gold for the year to date

BTC shrank its yearly gains to 56.3%, though still leading gold. The precios metal is up a net 45% for the year, while silver gained 40% net. 

The correlation of gold to BTC is now at 0.59, a relatively low level. The next move for both gold and BTC will determine how the correlation develops. Gold has shown signs of losing support, and is expected to go lower. 

BTC trades on a different set of factors, both linked to crypto natives and ETF demand. The digital asset is also exploring its performance in connection to reward halving cycles, raising the question of whether the current rally is nearing its end. 

The Bitcoin fear and greed index recovered to 51, showing neutral behavior for traders. Recently, the BTC market moved on extreme fear, but quickly recovered its previous activity levels.

Gold sentiment is also neutral, with 50% of traders going long on gold and 50% going short and betting on currency recovery for the US dollar. Gold may ease further in the case of signals from the Fed on quantitative easing.

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